September 28th, news:
According to SpotCom data: In September, the palm oil market in China saw a decline, mainly characterized by fluctuating decreases, with a price decrease of over 6%. At the beginning of the month, the average market price of palm oil was 9,964 CNY/ton. By September 28, the average market price of palm oil had fallen to 9,304 CNY/ton, a decrease of 6.62%.
The main factors affecting the palm oil market in September are as follows:
Overseas Supply Side: Malaysian production is rebounding rapidly, with peak-season output exceeding expectations.
MPOB August Monthly Report: August production totaled 1.8175 million tons, with inventories at 2.8245 million tons—up 7.48% month-on-month and 28.25% year-on-year. Inventories have been accumulating for five consecutive months, exceeding market expectations.
SPPOMA High Frequency: From September 1 to 25, production increased by 20.84% month-on-month, with both yield per unit area and oil extraction rate rising in tandem, maintaining a high‑output trend throughout September.
Indonesia’s production is also at a seasonal peak, but China’s B50 biodiesel policy was officially implemented in October, with September serving as a transition period. This has led to increased domestic palm oil consumption, thereby reducing exports and providing support to global supply; meanwhile, inventory pressures in Indonesia are markedly lower than in Malaysia.
External Market Drivers
Crude Oil and Biodiesel: In early September, the rise in crude oil prices significantly boosted the valuation of palm oil biodiesel; in mid-to-late September, crude oil prices retreated, and palm oil followed suit. Crude oil is an important emotional amplifier for palm oil; a strong crude oil market amplifies expectations of biodiesel demand, while a weak crude oil market reduces the elasticity of palm oil. Weather Expectations (long-term bullish): The impact of El Niño drought on palm tree yields is expected to be more pronounced at the end of the fourth quarter to the first quarter of next year. In September, it has not yet translated into actual production cuts, only supporting long-term contracts, making it difficult for near-term contracts to realize these benefits.
Chinese Market Situation
High port inventory
In September, China's palm oil port commercial inventory remained around 9.3 million tons, a significant increase of about 60% year-over-year, reaching a high level compared to recent years. The ample supply of spot goods suppressed the spot basis, leading to an overall weak basis. On the consumption side
In the first half of September, which is still part of the traditional low consumption season, downstream food factories mainly purchased based on rigid demand; in the middle to late part of the month, preparations for the Mid-Autumn Festival and National Day began, bringing marginal improvement, but there was no explosive purchasing. The inverted price difference between soybean oil and palm oil limited the substitution demand for soybean oil with palm oil, further weakening the consumption elasticity of palm oil.
Import
In the early stage, a large number of ships were purchased, leading to a higher volume of arrivals in September; with the import profit margin inverted on the market, the willingness to purchase ships later has decreased, and the expected arrivals for October-November are forecasted to decrease month-over-month.
Technical Analysis Market Forecast
According to the analysis by SpotCom, it can be seen that on September 13, the 10-day moving average of palm oil crossed below the 20-day moving average in China, and the difference between the averages expanded inversely, indicating an acceleration in the decline. Throughout September, palm oil in China showed a volatile downward trend, and there is still room for an increase in October.
In summary, in September, downward pressure on global palm oil supplies persisted, while rigid demand remained moderate. From a technical perspective, there is still room for further upside in the near term. Looking ahead to October, palm oil prices are expected to continue trending higher amid volatility, with the price range likely to hover between 9,400 and 9,700 CNY per tonne.
